Friday, 6 March 2009

Poor CRM (customer relationship management) is a waste of scarce management resources

A large retailer sent a letter to my wife with coupons as reward for her belonging to its exclusive loyalty program.

On thick, high quality paper, the letter started….”Dear Member”….
Dear member?

Is that how important CRM is to this retailer that they can’t afford to do a basic mail merge and personalise the letter?

It gets worse.

Of the dozen coupons, there was not a single offer made was of interest to my wife. She simply does not buy those product categories. This is a horrible waste of money.

• The shop has been in business for 5 years or more.
• We have shopped there regularly for a year.
• We bought a lot of our household furniture from there when we moved back to Bangalore last year.
• Ritu is a member of their loyalty program, having shared information on her age, interests, occupation.

You would think this would be more than enough information for them to design some seriously useful offers. Each of their offers was for purchases of an “indulgence”. High end stereo, watches, jewelry, pens, make up. A terrible selection in a time when people are postponing purchases of everything but the most essential items.

Unfortunately as I criticize this initiative, I will not know how successful their contact program was. Perhaps my wife was just plain unlucky. But I think not.

What would we have preferred?
- Offers on savings on purchases of petrol.
- Clothes
- Service offers on household whitegoods/ furniture

I am sure the retailer is under pressure to build up sales of slow moving items. But what’s the point of throwing good money behind bad? A consumer, unsure of his next pay check, is not thinking of a high end home theater system.

This is the time to seriously connect with the consumer.

Why would I be excited about a “buy one watch, get a pen set free”, or “buy a watch and get a T Shirt free?” when I am doing everything possible to postpone the watch in the first place? What do I do with a pen set? Or a Reebok T Shirt. The cross promotions were not attractive.

The amount of discount required for a consumer to reconsider an indulgence purchase during an economic slowdown are simply too deep. Anything less, is useless.


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